AU Data
- Tue 11.30 Monetary Policy Meeting Minutes
- Wed 11.00 MI Leading Index previous 0.3% m/m
- Wed 11.30 Housing starts previous -9.9% q/q
- Thu 11.30 RBA Monthly Bulletin
NAB Business Confidence (-2) jumped in May by the most in nearly 8 years but remains below zero showing pessimists still outnumber optimists. Job Advertisements (-0.2% m/m) steadied slightly in May after April’s record low but are still down 49.1% from a year earlier. Australia’s employment numbers were better than market expectations as Employment dropped by only 1,700 (expected -30,000) but the Unemployment Rate (5.7%) continued to climb and is tipped to exceed 6.5% by the end of the year. Perhaps the biggest boost to confidence in Australia’s domestic economy came from the Westpac/Melbourne Institute release of Consumer Confidence (+12.7% m/m) that recorded its biggest rise in 22 years and now stands at the highest level for 16 months. With economic data either stabilising or improving the RBA will be in no rush to cut rates any further and indeed the chances of the next move being up are increasing, albeit not until well into 2010.
NZ Data
- Mon 08.45 Manufacturing Sales previous 0.0% m/m
The RBNZ kept its benchmark interest rate unchanged at 2.5% for the first time since July as signs that the worst recession in three decades was coming to an end. Rates have been cut by 5.75% to record lows in an attempt to help an economy that began contracting in Q1 2008. The RBNZ Governor did not rule out further cuts and stated that the rates would be held down through until the latter part of 2010. Reasons for a prolonged period of low rates were the slow and fragile nature of any recovery and not least the strength of the NZD that is not helping to create the sort of external conditions needed for an export-led path to GDP growth. The NZD has surged 22% against the US Dollar in the last 3 months. Retail Sales (+0.5% m/m) rose for the second time in three months in April, as low interest rates and income tax cuts helped consumers back into retail and property markets.
US Data
- Mon 22.30 Empire State Manufacturing Index previous -4.6 expected -6.0
- Mon 23.00 TIC Long-term Purchases previous 55.8b
- Tue 03.00 NAHB Housing Market Index previous 16 expected 17
- Tue 22.30 Building Permits previous 0.5m expected 0.5m
- Tue 22.30 Core Producer Price Index previous 0.1% m/m expected 0.1% m/m
- Tue 22.30 Producer Price Index previous 0.3% m/m expected 0.6% m/m
- Tue 22.30 Housing Starts previous 0.46m expected 0.48m
- Tue 23.15 Capacity Utilisation previous 69.1% expected 68.6%
- Tue 23.15 Industrial Production previous -0.5% m/m expected -0.6% m/m
- Wed 22.30 Core Consumer Price Index previous 0.3% m/m expected 0.1% m/m
- Wed 22.30 Consumer Price Index previous 0.0% m/m expected 0.3% m/m
- Wed 22.30 Current Account previous -133b expected -85b
- Thu 22.30 Unemployment Claims previous 601k
- Fri 00.00 Philadelphia Fed Manufacturing Index previous -22.6 expected -18.0
- Fri 00.00 Conference Board Leading Index previous 1.0% m/m expected 0.8% m/m
Retail Sales (+0.5% m/m) caught the eye last week as evidence that the very important consumer sector of the economy was showing some signs of life. Sales rose in May for the first time in 3 months as shoppers returned to automobile showrooms to snap up heavily discounted stock. Two measures of consumer confidence underpinned the retail sales data. The IBD/TIPP Economic Optimism Index (50.8) rose in June to its highest level since November 2008 and the preliminary UoM Consumer Sentiment survey (69.0) rose slightly, with the future expectations sub-index highlighting continued concerns about higher fuel costs and employment. Other data releases suggest that the road to recovery is going to be long and hard. US foreclosure filings for May improved slightly from April’s record but mortgages are still failing at an alarming rate, up 18% year on year. Since temporary freezes on foreclosures were lifted in March another 1 million foreclosures filings have been posted in the last 3 months, which is unprecedented. The Feds Beige Book also gave little cause for optimism with economic activity weakening in almost all areas though the pace of deceleration was slowing in 5 of 12 districts. This week manufacturing surveys and Industrial Production will been watched closely for signs of stability returning.
JP
N Data
- Tue BOJ Interest Rate Decision previous 0.10% expected 0.10%
- Tue Monetary Policy Statement
- Wed 15.00 BOJ Monthly Report
- Fri 09.50 Monetary Policy Meeting Minutes
Two leading indicators of business confidence failed to impress last week as preliminary Machine Tool Orders were down 79.3% from a year earlier and Core Machinery Orders, an indicator of capital investment in the next 3 to 6 months, slumped 5.4% m/m to a 22-year low. The collapse in global demand has forced manufacturers to cut production by more than a third from last year’s peak and companies remain sceptical about future prospects with a recent survey showing that capital spending could be cut by 15.9% this business year, outstripping the previous record of 11.8% in 1993. Postponed investments and weak global demand are also causing prices to fall; the Corporate Goods Price Index fell 5.4% y/y in May, prompting companies and consumers alike to further delay purchases as the economy slips into deflation. This week attention will focus on the BOJ and the interest rate decision with no expectation of any major policy shifts.
Interest rate outlook
| Country |
Current rate |
Last change |
Date of change |
Next meeting |
| AUS (RBA) |
3.00% |
-25bps |
07/04/09 |
7th July |
| NZ (RBNZ) |
2.50% |
-50bps |
30/04/09 |
30th July |
| US (FED) |
0-0.25% |
-75bps |
16/12/08 |
24th June |
| JPN (BOJ) |
0.10% |
-20bps |
19/12/08 |
15th June |